Shane Parrish, creator of the Farnam Street Blog, discusses mental models for investing, the importance of decision journals, the value of doing nothing, defining happiness, and the power of rereading books for deeper understanding in this peaceful and informative podcast.
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Quick takeaways
Mental models are essential for making effective investment decisions.
Avoiding negative outcomes and achieving positive outcomes are crucial in investing.
Deep dives
Teaching kids about money and happiness
Teaching kids about money is best done through personal modeling and involving them in financial decision-making. By showing them how money works, discussing saving and spending choices, and investing their savings in companies they understand, children can gain a practical understanding of financial concepts. It's important to instill the idea that money is important but shouldn't be the sole focus in life. Additionally, teaching kids about happiness involves living in the present, connecting with them, and being mindful of their emotional well-being.
Benefits of rereading books and teaching moments
Rereading books offers a deeper understanding and fluency of the subject matter. By revisiting a book, one can notice different details, grasp nuances, and build upon prior knowledge. This process deepens the reader's understanding and retention of the text. Furthermore, parenting can serve as a valuable teaching moment. Parents can model good financial behavior, involve children in financial discussions, and emphasize the importance of values, persistence, and decision-making.
Gray thinking and personal finance
Gray thinking, which acknowledges shades of complexity, can be applied to personal finance by avoiding black-and-white approaches. Recognizing that money management involves uncertainty and risk, individuals can tailor their financial decisions to their circumstances and goals. This could include index investing, conservatively preserving wealth, adhering to a process, learning from past mistakes, and staying open to changing perspectives.
Lessons from Marcus Aurelius' Meditations
The book Meditations by Marcus Aurelius made a different impression upon rereading it later in life. The initial perception of the book might be influenced by the reader's personal experiences, emotions, or understanding at that time. However, revisiting the book, especially after life events or personal growth, can offer a newfound appreciation and understanding of its messages and philosophy.
Welcome back to another episode of the Rational Reminder Podcast. Our guest today is Shane Parrish. Shane runs the Farnam Street Blog, which has to be one of the most valuable collections of information that exists on the Internet. Farnam Street’s stated intention is mastering the best of what other people have already figured out and the site gets over a million visitors. The content is unbelievable in terms of improving yourself, thinking better, and learning better. Shane interviewed Ray Dalio not long ago and over time he’s spoken with some pretty serious people in his podcast, The Knowledge Project Podcast. This episode is a very peaceful, thoughtful, interesting conversation that we know listeners will love. Shane’s just got so much information in his head that we all can get a ton of value from. So, be sure to keep listening to hear more!
Key Points From This Episode:
What mental models are and why they’re important. [0:02:07.0]
Top list of mental models for making investing decisions. [0:03:39.0]
The most harmful biases to investors. [0:04:44.0]
Importance of process when making investment decisions. [0:07:51.0]
Why Shane uses decision journals. [0:09:11.0]
Being willing to look stupid. [0:12:36.0]
How intuition and skills go together in investing. [0:14:16.0]
Public markets versus private markets. [0:16:19.0]
Avoiding negative outcomes and having positive outcomes. [0:20:41.0]
Understanding uncertainty and risk. [0:24:35.0]
Defining happiness for himself. [0:33:15.0]
Lessons Shane learned about parenting. [0:36:28.0]
Book that Shane loves to read. [0:43:55.0]
. [0:25:50.0]
And much more!
For more information or to contact Cameron and Ben, visit pwlcapital.com
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